1 / 16

MANAGING THE SALES TAX EXEMPTION CERTIFICATE: Best Practices and legal considerations

MANAGING THE SALES TAX EXEMPTION CERTIFICATE: Best Practices and legal considerations. Thadd Curry Ariat International Thadd.curry@Ariat.com Matthew MacNeil Avalara Matthew.macneil@avalara.com Scott E. Blakeley, Esq. SEB@BlakeleyLLP.com. 2 Park Plaza, Suite 400,

lareina-mccarty
Download Presentation

MANAGING THE SALES TAX EXEMPTION CERTIFICATE: Best Practices and legal considerations

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MANAGING THE SALES TAX EXEMPTION CERTIFICATE: Best Practices and legal considerations Thadd Curry Ariat International Thadd.curry@Ariat.com Matthew MacNeil Avalara Matthew.macneil@avalara.com Scott E. Blakeley, Esq. SEB@BlakeleyLLP.com 2 Park Plaza, Suite 400, Irvine, California 92614 V. (949) 260-0612 | F. (949) 260-0613 www.BlakeleyLLP.com Orange County | Los Angeles | Delaware | New York

  2. AGENDA • The Sales Tax Process • Exemption Certificates • Nexus • Managing the Sales Tax Exemption Certificate Process • The SSUTA • Types of Certificates and Forms • Drop Shipments • Controlling Certificates • Common Problems • Sales Tax Collection • Consequences of Failing to Collect Sales Tax • A Look Ahead

  3. Overview • Responsibility for managing sales tax exemption certificates falling upon the credit team • State taxing authorities recognize the mismanagement of certificate management

  4. Exemption Certificates • Nexus • Collect sales taxes and certificates if you have Nexus in the state • What it takes to achieve Nexus in most states

  5. Exemption Certificates • Managing the Sales Tax Exemption Certificate Process • Collection of tax exemption certificate as part of the new account set-up process • Certificate is validated • Maintain the certificates to allow easy retrieval • Monitor expiration dates

  6. Exemption Certificates • Considerations for Valid Exemption Certificate • Registration number • Dated • Signature • Good faith requirements

  7. Exemption Certificates • Types of Exemption Documents • Resale Certificate • Merchandise intended for resale • Tangible personal property purchase to lease or rent • Taxable service performed on tangible personal property in resale inventory • Direct Pay Permits • Purchases by Governments and Non-profits • SST Form • MTC Form • State Issued Form

  8. Exemption Certificates - Automation • Exemption Certificate Management (ECM) Software • Tax Decision Software • Enterprise Resource Planning (ERP)/Billing Software

  9. Exemption Certificates: Drop Shipments • Application of Sales Tax in Drop Shipments • If the Third Party Shipper is not registered to collect tax in the state where shipping • If the Seller is not registered in the Buyer state • If the Third Party Shipper is registered to collect tax in the Buyer’s state

  10. Controlling Certificates: Common Problems • Audit Trends and Regulations • Rejection of certificates • Contractors

  11. Sales Tax Collection • Once the vendor has nexus and the purchaser does not have a valid exemption certificate, the vendor must begin its collection process • Problems with collection • Preventative measures • Collection shouldn’t be a burden on seller if done right

  12. Consequences of Failing to Collect Sales Tax When Vendor Does Not Have A Valid Exemption Certificate • Sales to international retailers • Subsidiaries and other affiliated entities • Wholly owned subsidiary

  13. Exemption Certificates: A Look Ahead • More complicated, more taxes, and more exemptions • More invasive • Visual audits • The emergence/demise of SST? • Federal Sales Tax (FairTax) replacing income tax • More states looking into ways to control contractors • The idea of VAT being passed around in California

More Related